Inflation down 2 months in a row
...repo rate remains at 3 per cent
The country's inflation rate decelerated slightly for the second consecutive month in July, the Central Bank said yesterday.
Headline inflation slowed to 10.8 per cent (year on year) in July, down from 11 per cent in June, the Bank said in its latest repo report.
However, on a monthly basis, headline inflation rose by 0.8 per cent after having declined by a similar rate in the previous month.
Food inflation, the main driver of headline inflation, measured 22.6 per cent in July 2012, compared with 24.1 per cent in June. The slower rate of increase in food prices came mainly from vegetable prices (35.5 per cent in July compared to 42.1 in June) and fish (8.2 per cent in July from 11.3 in June). The rate of increase for bread and cereals, milk, cheese and eggs, and sugar and confectionery products was also slower.
Meats, oils and fats, on the other hand, recorded slightly faster price increases.
Core inflation, which excludes food prices, rose 2.8 per cent in July: a 0.5 per cent increase over the previous month.
The report also noted on an international level, a severe drought in the mid-western United States had pushed up the price of maize (corn), while rains in Brazil have contributed to an increase in sugar prices.
"While the effects of these increases have not yet fully impacted domestic food inflation, some local retailers have already signalled their intention to pass on these global prices to consumers," the Bank noted.
Overall credit granted to the private sector grew 3.1 per cent in June, up from 2.8 per cent in May. Real estate mortgages rose 10.4 per cent in June, up from 9.8 in May, while business loans grew 5.7 per cent, up 4.6 per cent in May. Consumer loans, however, slipped to 0.6 per cent in June from 1.1 per cent in May.
There was a surge of almost $3 billion in excess liquidity in August, but the Bank's operation in the domestic money and foreign exchange markets helped contain liquidity within manageable levels.
"With private demand and economic activity still quite subdued, the Bank continues to view its accommodative monetary stance as appropriate to foster a sustained recovery in non-energy sector activity. Against this background, the Bank has decided to maintain the repo rate at 3.0 per cent."